Evaluate Core Inventory to Sell Cars Faster Many experienced dealers will admit a challenge greater than selling autos is buying the right ones for their inventory – autos customers want. With vehicle
values always in swing between public demand and manufacturer supply, dealers are often unsure which units will bring the greatest return on investment.Find your breadand-butter. Vehicles in your core inventory sell fastest and make you the most money. Typically, a vehicle is core to your business if you can regularly sell it in less than 30 days and hold more than $1,500 gross profit. They are your bread-and-butter.
STAND OUT.
Once you determine the best-selling vehicles on your lot and in your market, the final step is staying competitive with other dealers. To identify potential core inventory candidates, look at sales logs from the past few months. Record how many days it took to sell, and how much gross profit you made on each vehicle. Then, compare to see which units consistently sold fast and gave you the most money. Your goal is to learn which vehicles are best sellers for your business. Hot or not? The next step in growing your business is to find best sellers in your area with help from an inventory management system. A system such as AAX by DealerTrack helps you seamlessly evaluate and manage your entire inventory. The Nissan Altima may be the fastest selling car in your area, but may bring in only a couple hundred dollars profit. On the other hand, it may take twice as long to sell an Acura MDX but you can expect to walk away with thousands in gross. You need to have trusted documentation to support your purchasing decisions. While you should never have 100 percent of autos as core inventory, you want to aim for at least 50 percent. You should still feel free to take on non-core autos if you truly believe they will sell. Stand out. Once you determine the best-selling vehicles on your lot and in your market, the final step is staying competitive with other dealers. Make sure your prices are in line with other online listings. Also, check the history before acquiring autos and offer it at retail. Most inventory management systems and auctions have integrated access to Carfax Vehicle History Reports. Finally, consider including Carfax in your advertising to attract customers and build confidence. The market for used vehicles can be diverse and unpredictable, but you can still find autos in your area that sell consistently. Look at your core inventory and stock more of these valuable units. Remember to regularly check the performance of your inventory – an inventory management system can help. Finally, check the vehicle’s history to avoid units customers don’t want. You can sell faster, improve your buying power and make better decisions for your business by arming yourself with information about your core inventory vehicles.
Supreme Court Ruling Provides Clarity On Arbitration Agreements A recent U.S. Supreme Court decision marks a turning point for auto dealers in the use of arbitration agreements to avoid class action lawsuits and class arbitration. On April 27, the
court ruled under the Federal Arbitration Act such agreements are enforceable, helping dealers avoid lengthy legal battles with hundreds or thousands of disgruntled consumers. In position papers, press releases and letters to Congress, numerous state and metro dealer associations had pointed to arbitration agreements with waivers of class arbitration as a means to quickly, efficiently and cost-effectively resolve consumer disputes in the place of class-action lawsuits. Arbitration agreements that include waivers of class-action arbitration can help dealers avoid a tarnished reputation, a decreased customer base and millions of dollars in damages and legal fees resulting from a classaction suit. The associations have also contended that the agreements benefit consumers by helping them get complaints taken care of more rapidly and saving them the cost of attorneys’ fees. Recent cases highlight the favorable impact the Supreme Court decision could have on the industry. For example, a California dealer made headlines in February when a Court of Appeals judge ruled against it in a class-action lawsuit dating back to 2007. The suit was tied to the dealer’s practice of backdating a sales contract and including insurance in the purchase price of the vehicle. The Court of Appeals’ decision will allow 1,500 auto buyers to have their purchase contracts rescinded, which is estimated to cost the dealer up to $30 million. And in March 2010, a Missouri dealer group settled a class-action lawsuit tied to document preparation fees for $8.8 million. That suit was filed in 2008. A well-crafted arbitration agreement that avoids resolving disputes in court and prohibits class arbitration can help dealers avoid legal landmines like these. Because the Supreme Court’s decision removes a significant obstacle to the enforceability of these agreements, independent auto dealers who have been uncertain about using them in retail installment sales contracts or leases may be inclined to give them a second look. Those dealers already using them have a reason to feel more confident that they will be enforced if challenged in court. BY CHIP ZYVOLOSKI
Chip Zyvoloski is senior attorney for indirect lending at Wolters Kluwer Financial Services. For more information, visit www. wolterskluwerfs.com/indirect.
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